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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2005

or

For the transition period from                             to                        

Commission file number 1-31557

Wachovia Preferred Funding Corp.

(Exact name of registrant as specified in its charter)

1620 East Roseville Parkway

Roseville, California 95661

(Address of principal executive offices)

(Zip Code)

(877) 867-7378

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨  No  x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes  ¨  No  ¨

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of April 30, 2005, there were 99,999,900 shares of the registrant’s common stock outstanding.

Forward Looking Statements

Wachovia Preferred Funding Corp. (“Wachovia Funding”) may from time to time make written or oral forward-looking statements, including statements contained in Wachovia Funding’s filings with the Securities and Exchange Commission (including its Annual Report on Form 10-K and this Quarterly Report on Form 10-Q, and the Exhibits hereto and thereto), in its reports to stockholders and in other Wachovia Funding communications, which are made in good faith by Wachovia Funding pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include, among others, statements with respect to Wachovia Funding’s beliefs, plans, objectives, goals, guidelines, expectations, financial condition, results of operations, future performance and business of Wachovia Funding, including without limitation, (i) statements regarding certain of Wachovia Funding’s goals and expectations with respect to earnings, earnings per share, revenue, expenses and the growth rate in such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, and (ii) statements preceded by, followed by or that include the words “may”, “could”, “should”, “would”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “plan”, “projects”, “outlook” or similar expressions. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond Wachovia Funding’s control). The following factors, among others, could cause Wachovia Funding’s financial performance to differ materially from that expressed in such forward-looking statements:

Wachovia Funding cautions that the foregoing list of important factors is not exclusive. Wachovia Funding does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of Wachovia Funding.

“Wachovia Funding”, “we”, “our” and “us” refer to Wachovia Preferred Funding Corp. “Wachovia Preferred Holding” refers to Wachovia Preferred Funding Holding Corp., the “Bank” refers to Wachovia Bank, National Association, and “Wachovia” refers to Wachovia Corporation.

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PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements.

WACHOVIA PREFERRED FUNDING CORP.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31, 2005 and December 31, 2004

See accompanying note to consolidated financial statements.

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WACHOVIA PREFERRED FUNDING CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended March 31, 2005 and 2004

See accompanying note to consolidated financial statements.

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WACHOVIA PREFERRED FUNDING CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

Three Months Ended March 31, 2005 and 2004

See accompanying note to consolidated financial statements.

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WACHOVIA PREFERRED FUNDING CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended March 31, 2005 and 2004

See accompanying note to consolidated financial statements.

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WACHOVIA PREFERRED FUNDING CORP.

AND SUBSIDIARIES

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2005 and December 31, 2004

NOTE 1:     CONSOLIDATED FINANCIAL STATEMENTS

Wachovia Preferred Funding Corp. and its subsidiaries are subsidiaries of Wachovia Bank, National Association, and its subsidiaries, which is a wholly-owned subsidiary of Wachovia of Alabama, Inc., which is a wholly-owned subsidiary of Wachovia Corporation.

The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, the unaudited condensed consolidated financial statements do not include all the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. The unaudited condensed consolidated financial statements of Wachovia Funding, include, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of such financial statements for all periods presented. The financial position and result of operations as of and for the three months ended March 31, 2005, are not necessarily indicative of the results of operations that may be expected in the future. Please refer to Wachovia Funding’s 2004 Annual Report on Form 10-K for additional information related to Wachovia Funding’s audited consolidated financial statements for the three years ended December 31, 2004, including the related notes to consolidated financial statements.

Certain amounts in 2004 were reclassified to conform with the presentation in 2005. These reclassifications had no effect on Wachovia Funding’s previously reported consolidated financial position or results of operations.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations contains certain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking statements. Please refer to our 2004 Annual Report on Form 10-K for further information related to our accounting policies and risk governance and administration.

For the tax year ending December 31, 2005, we expect to be taxed as a real estate investment trust (a “REIT”), and we intend to comply with the relevant provisions of the Internal Revenue Code to be taxed as a REIT. These provisions for qualifying as a REIT for federal income tax purposes are complex, involving many requirements, including among others, distributing the majority of our earnings to shareholders and satisfying certain asset, income and stock ownership tests. To the extent we meet those provisions, with the exception of the income of our taxable REIT subsidiary, Wachovia Preferred Realty, LLC (“WPR”), we will not be subject to federal income tax on net income. We currently believe that we continue to satisfy each of these requirements and therefore continue to qualify as a REIT. We continue to monitor each of these complex tests.

In the event we do not continue to qualify as a REIT, we believe there should be minimal adverse effect of that characterization to us or to our shareholders:

Please refer to our 2004 Annual Report on Form 10-K for additional information on WPR.

Critical Accounting Policies

Our accounting and reporting policies are in accordance with GAAP, and they conform to general practices within the applicable industries. The application of certain of these principles involves a significant amount of judgment and the use of estimates based on assumptions for which the actual results are uncertain when we make the estimation. We have identified the allowance for loan losses policy as being particularly sensitive in terms of judgments and the extent to which estimates are used. For more information on our critical accounting policies, please refer to our 2004 Annual Report on Form 10-K.

Results of Operations

For purposes of this discussion, the term “loans” includes loans and loan participation interests, the term “residential loans” includes home equity loans and residential mortgages and the term “commercial loans” includes commercial and commercial real estate loans. See Table 1, Performance and Dividend Payout Ratios, following “—Accounting and Regulatory Matters” for certain performance and dividend payout ratios for the quarters ended March 31, 2005 and March 31, 2004.

Although we have the authority to acquire interests in an unlimited number of loans and other assets from unaffiliated third parties, the majority of our interests in loans that we have acquired have been

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acquired from the Bank or an affiliate pursuant to loan participation agreements between the Bank or an affiliate and us. The remainder of our assets was acquired directly from the Bank. The Bank either originated the assets, or purchased them from other financial institutions or acquired them as part of the acquisition of other financial institutions.

2005 to 2004 Three Month Comparison

Net income available to common stockholders.    We earned net income available to common stockholders of $58.7 million and $47.4 million in the first quarter of 2005 and 2004, respectively. Higher net interest income, reflecting a shift to higher yielding assets, lower provision for credit losses and lower noninterest expense led to the increase in 2005. These were partially offset by a loss on interest rate swaps in the first quarter of 2005 compared to a gain on interest rate swaps in the first quarter of 2004. Additionally, income taxes were a benefit of $1.1 million in the first quarter of 2005 primarily as the result of the aforementioned loss on interest rate swaps compared to an expense of $5.2 million in the first quarter of 2004.

Interest Income.    Interest income increased $41.7 million, or 45%, from the first quarter of 2004 to $133.9 million in the first quarter of 2005. The increase includes $32.3 million, $4.0 million and $2.0 million in higher interest income on home equity loans, commercial loans and residential mortgages, respectively. Average home equity loans and average residential mortgages increased $2.1 billion and $159 million in the first quarter of 2005 compared with the first quarter of 2004, respectively. Average commercial loans decreased $2.1 billion in the same period due to pay-downs. Commercial loan pay-downs were reinvested in home equity loans and residential mortgage loans, both of which carry a higher yield than commercial loans. Interest income on cash invested in overnight eurodollar deposit investments increased $3.5 million to $6.1 million in the first quarter of 2005 from the first quarter of 2004 due to the increase in short-term interest rates.

The average balances, interest income and rates related to interest-earning assets for the three months ended March 31, 2005 and 2004, are presented below.

Interest Expense.    Interest expense increased to $2.2 million in the first quarter of 2005 from $1.3 million in the first quarter of 2004 due to $718,000 in interest expense related to a $250.0 million borrowing on our existing line of credit with the Bank in February 2005 and an increase in average short-term interest rates paid on the collateral held on the interest rate swaps. This was partially offset by a decline in average balances of collateral. We expect to pay-down the outstanding principal balance on our line of credit with the Bank as we receive cash on loan pay-downs from our loan portfolio.

Provision for Credit Losses.    The provision for credit losses was a benefit of $881,000 in the first quarter of 2005 compared with an expense of $1.2 million in the first quarter of 2004, as a result of the improved credit quality of the loan portfolio including the changing risk profile as balances in commercial loans continued to decrease due to pay-downs.

Gain (Loss) on Interest Rate Swaps.    Our interest rate swaps lose value in an increasing rate environment and gain value in a declining rate environment. The loss on interest rate swaps was $4.2 million

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in the first quarter of 2005 compared with a gain of $14.4 million in the first quarter of 2004. The loss in the first quarter of 2005 is the result of increases in the interest rate environment during that period. See “Interest Rate Risk Management” for additional information related to unrealized and realized gains and losses on interest rate swaps.

Loan Servicing Costs.    Loan servicing costs increased $1.3 million to $2.5 million in the first quarter of 2005 from $1.2 million in the first quarter of 2004 due to higher average home equity loans partially offset by lower average commercial loans. Average home equity loans increased $2.1 billion from the first quarter of 2004, while average commercial loans decreased $2.1 billion during the same time period. These loans are serviced by the Bank pursuant to our participation and servicing agreements which include market-based fees. For commercial loans, the fee is equal to the total committed amount of each loan multiplied by 0.025%. For home equity loans, the fee is equal to the outstanding balance of each loan multiplied by 0.050%.

Management Fees.    Management fees were $6.1 million in the first quarter of 2005 compared with $7.4 million in the first quarter of 2004. Management fees represent reimbursements to Wachovia for general overhead expenses paid on our behalf. Wachovia charges the management fee to affiliates on a monthly basis that have over $10.0 million in assets and over $2.0 million in estimated annual noninterest expense. If the affiliate qualifies for an allocation, the affiliate is assessed monthly management fees based on its relative percentage of total consolidated assets and noninterest expense plus a 10% markup.

Income Tax Expense (Benefit).    Income taxes, which are based on the pre-tax income of WPR, our taxable REIT subsidiary, were a benefit of $1.1 million in the first quarter of 2005 compared with an expense of $5.2 million in the first quarter of 2004. WPR holds our interest rate swaps and its pre-tax loss in the first three months ended March 31, 2005, reflects the loss on interest rate swaps noted above.

Balance Sheet Analysis

March 31, 2005 to December 31, 2004

Total Assets.    Our assets primarily consist of commercial and residential loans although we have the authority to hold assets other than loans. At March 31, 2005 and December 31, 2004, total assets were $12.6 billion and $12.3 billion, respectively. Net loans were 89% of total assets at both March 31, 2005 and December 31, 2004.

Loans.    Net loans increased $256.4 million to $11.2 billion at March 31, 2005, compared with December 31, 2004 primarily reflecting a 42% increase in home equity loans partially offset by an 8% decrease in commercial loans. At March 31, 2005 and December 31, 2004, home equity loans comprised 27% and 19% of loans, respectively. Commercial loans comprised 55% and 61% of loans at March 31, 2005 and December 31, 2004, respectively. The decrease in commercial loans was due to pay-downs in the first quarter of 2005 while the increase in home equity loans was due to the reinvestment of pay-downs into home equity loans. See Table 2 following “Accounting and Regulatory Matters” for additional information.

Allowance for Loan Losses.    The allowance for loan losses decreased $1.9 million from December 31, 2004, to $98.0 million at March 31, 2005. The decrease reflects changes in the composition of our loan portfolio and the resulting lower risk profile as well as improving credit conditions.

The reserve for unfunded lending commitments, which is included in other liabilities, was $620,000 at March 31, 2005 compared with $728,000 at December 31, 2004. The decline was primarily related to declining outstanding commitments in our commercial loan portfolio.

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The allowance for credit losses, which includes both the allowance for loans losses and the reserve for unfunded lending commitments, amounted to $98.6 million at March 31, 2005, compared with $100.7 million at December 31, 2004.

See Table 2 following “—Accounting and Regulatory Matters” for additional information related to the allowance for loan losses.

Interest Rate Swaps.    Interest rate swaps decreased to $454.7 million at March 31, 2005, from $459.8 million at December 31, 2004, which represents the fair value of our net position in interest rate swaps. The fair value decreases during a rising interest rate environment and as cash is received.

Accounts Receivable—Affiliates, Net.    Accounts receivable from affiliates, net, was $47.6 million at March 31, 2005, compared with $39.9 million at December 31, 2004, as a result of intercompany cash transactions related to net loan paydowns, interest receipts and funding.

Collateral Held on Interest Rate Swaps.    Collateral held on interest rate swaps decreased to $452.3 million at March 31, 2005, from $458.3 million at December 31, 2004, reflecting the decline in the fair value of the interest rate swaps.

Line of credit with affiliate.    Line of credit with affiliate was $250.0 million at March 31, 2005, and zero at December 31, 2004, which reflects a borrowing on our existing line of credit with the Bank in February 2005. We borrowed under this existing line of credit in conjuction with the purchase of $1.1 billion of residential loans from the Bank.

Commitments

Our commercial loan portfolio includes unfunded loan commitments that are provided in the normal course of business. For commercial borrowers, loan commitments generally take the form of revolving credit arrangements to finance customers’ working capital requirements. These instruments are not recorded on the balance sheet until funds are advanced under the commitment. For lending commitments, the contractual amount of a commitment represents the maximum potential credit risk if the entire commitment is funded and the borrower does not perform according to the terms of the contract. A large majority of these commitments expire without being funded, and accordingly, total contractual amounts are not representative of our actual future credit exposure or liquidity requirements. The “Risk Governance and Administration—Credit Risk Management” section in our 2004 Annual Report on Form 10-K describes how Wachovia, as owner of the Bank which originates and services the loans, manages credit risk when extending credit.

Loan commitments create credit risk in the event the counterparty draws on the commitment and subsequently fails to perform under the terms of the lending agreement. This risk is incorporated into an overall evaluation of credit risk and to the extent necessary, reserves are recorded on these commitments. Uncertainties around the timing and amount of funding under these commitments may create liquidity risk. At March 31, 2005 and December 31, 2004, unfunded commitments to extend credit were $868.2 million and $1.1 billion, respectively.

Liquidity and Capital Resources

Our internal sources of liquidity generally include cash generated from our operations and principal repaid on loans. In addition, any necessary liquidity could be obtained by drawing on the line of credit that we have with the Bank. Under the terms of that facility, we can borrow up to $2.0 billion under a revolving demand note at a rate of interest equal to the federal funds rate. Further, we could issue additional common or preferred stock, subject to any pre-approval rights of our shareholders. We believe that our existing sources of liquidity are sufficient to meet our funding needs. At March 31, 2005, $250.0 million was outstanding under the line of credit with the Bank. Additionally, in conjunction with the purchase of residential loans in May 2005, $450.0 million was borrowed on this line of credit. We expect to paydown the outstanding principal balance on our line of credit with the Bank as we receive cash on loan pay-downs from our loan portfolio.

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Risk Governance and Administration

For additional information on credit risk management, concentration of credit risk, operational risk management, liquidity risk management and financial disclosure, please refer to our 2004 Annual Report on Form 10-K.

Interest Rate Risk Management

Interest rate risk is the sensitivity of earnings to changes in interest rates. Our income consists primarily of interest income on our variable rate loans. In a declining rate environment, we may experience a reduction in interest income on our loan portfolio and a corresponding decrease in funds available to be distributed to our shareholders. The reduction in interest income may result from downward adjustments of the indices upon which the interest rates on loans are based and from prepayments of loans with fixed interest rates, resulting in reinvestment of the proceeds in lower yielding assets. In December 2001, the Bank contributed receive-fixed interest rate swaps to us in exchange for common stock. Subsequent to the contribution, we entered into pay-fixed interest rate swaps that serve as an economic hedge to the receive-fixed interest rate swaps. Currently, we do not expect to enter into additional derivative transactions, although we may enter into such transactions in the future.

At March 31, 2005, approximately 29% of the loans in our portfolio had fixed interest rates. Such loans tend to increase our interest rate risk. We monitor the rate sensitivity of assets acquired. Our methods for evaluating interest rate risk include an analysis of interest-rate sensitivity “gap”, which is defined as the difference between interest-earning assets and interest-bearing liabilities maturing or repricing within a given time period. A gap is considered positive when the amount of interest rate-sensitive assets exceeds the amount of interest rate-sensitive liabilities. A gap is considered negative when the amount of interest rate-sensitive liabilities exceeds interest rate-sensitive assets.

During a period of rising interest rates, a negative gap would tend to adversely affect net interest income, while a positive gap would tend to result in an increase in interest income. During a period of falling interest rates, a negative gap would tend to result in an increase in net interest income, while a positive gap would tend to affect net interest income adversely. Because different types of assets and liabilities with the same or similar maturities may react differently to changes in overall market rates or conditions, changes in interest rates may affect net interest income positively or negatively even if an institution is perfectly matched in each maturity category.

As of March 31, 2005, $8.8 billion, or 70% of our assets, had variable interest rates and could be expected to reprice with changes in interest rates. As of March 31, 2005, our liabilities were $798.3 million, or 6% of our assets, while stockholders’ equity was $11.8 billion, or 94% of our assets. This positive gap between our assets and liabilities indicates that an increase in interest rates would result in an increase in net interest income and a decrease in interest rates would result in a decrease in net interest income.

The fair value of $3.3 billion of fixed rate loans and loan participations was approximately $3.3 billion and the fair value of $7.9 billion of variable rate loans and loan participations was approximately $7.8 billion at March 31, 2005.

We account for derivative financial instruments in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 133, Accounting for Derivative Instruments and Hedging Activities, as subsequently amended by SFAS 137, SFAS 138 and SFAS 149, which establishes accounting and reporting standards for derivatives and hedging activities. Under SFAS 133, all our derivatives (currently consisting of interest rate swaps) are recorded at fair value on the balance sheets. When we have more than one transaction with a counterparty and there is a legally enforceable master netting agreement between the parties, the net of the gain and loss positions are recorded as an asset or a liability on our consolidated balance sheets. Realized and unrealized gains and losses are recorded as a net gain or loss on interest rate swaps on our consolidated statements of income.

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At March 31, 2005, our position in interest rate swaps was an asset of $753.5 million and a liability of $298.8 million, which is recorded net on our consolidated balance sheet at fair value. The following table presents interest rate swap maturities.

Market Risk Management

Market risk is the risk of loss from adverse changes in market prices and interest rates. Market risk arises primarily from interest rate risk inherent in lending, investment in derivative financial instruments and borrowing activities.

At March 31, 2005, our receive-fixed interest rate swaps with a notional amount of $4.25 billion had a weighted average maturity of 7.0 years, weighted average receive rate of 7.41% and weighted average pay rate of 3.03%. Our pay-fixed interest rate swaps with a notional amount of $4.25 billion had a weighted average maturity of 7.0 years, weighted average receive rate of 3.03% and weighted average pay rate of 5.69% at March 31, 2005. All the interest rate swaps have variable pay or receive rates based on three- or six-month LIBOR, and they are the pay or receive rates in effect at March 31, 2005.

Due to the difference in fixed rates in our interest rate swaps, volatility is expected given certain interest rate fluctuations. If market rates were to decrease 100 basis points or 200 basis points, we would recognize short-term net gains on our interest rate swaps of $16.0 million or $32.8 million, respectively. If market rates were to increase 100 basis points or 200 basis points, we would recognize short-term net losses on our interest rate swaps of $15.1 million or $29.5 million, respectively. These short-term fluctuations will eventually offset over the life of the interest rate swaps when held to maturity, with no change in cash flow occurring for the net positions. The changes in value of the net swap positions were calculated under the assumption there was a parallel shift in the LIBOR curve using 100 basis point and 200 basis point shifts, respectively.

Transactions with Related Parties

We are subject to certain income and expense allocations from affiliated parties for various services received. In addition, we enter into transactions with affiliated parties in the normal course of business. The nature of the transactions with affiliated parties is discussed below.

The Bank services our loans on our behalf, which includes delegating servicing to third parties in the case of residential mortgages. We pay the Bank a 0.025% fee for this service on commercial loans and a 0.050% fee on home equity loans. Servicing fees related to residential mortgages are negotiated when the Bank purchases loans from unrelated third parties, and are based on the purchase price of the loans. Additionally, we are subject to Wachovia’s management fee policy and are allocated a monthly fee from Wachovia for general overhead expenses paid on our behalf if we meet certain asset and expense criteria. We

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met these criteria in 2005 and 2004 and expect to continue to meet these criteria in the future and therefore expect that we will continue to incur management fee expense. We also have a swap servicing and fee arrangement with the Bank, whereby the Bank provides operations, back office, book entry, record keeping and valuation services related to our interest rate swaps, for which we pay a fee to the Bank.

Eurodollar deposit investments with the Bank are our primary cash management vehicle. We have also entered into certain loan participations with affiliates and are allocated a portion of all income associated with these loans.

In February 2005, we paid the Bank $1.1 billion in cash for residential loans, which reflected a fair value purchase price. In conjunction with this purchase, we borrowed $250.0 million under our existing line of credit with the Bank and incurred $718,000 in interest expense owed to the Bank in the first quarter of 2005. Interest accrues under this line of credit at a rate equal to the federal funds rate.

The Bank acts as our collateral custodian in connection with collateral pledged to us related to our interest rate swaps. For this service, we pay the Bank a fee based on the value of the collateral. In addition, the Bank is permitted to rehypothecate and use as its own the collateral held by the Bank as our custodian. The Bank pays us a fee based on the value of the collateral involved for this right. The Bank also provides a guaranty of our obligations under the interest rate swaps when the swaps are in a net payable position, for which we pay a monthly fee based on the absolute value of the net notional amount of the interest rate swaps.

Accounting and Regulatory Matters

Various legislative and regulatory proposals concerning the financial services industry are pending in Congress, the legislatures in states in which we conduct operations and before various regulatory agencies that supervise our operations. Given the uncertainty of the legislative and regulatory process, we cannot assess the impact of any such legislation or regulations on our consolidated financial condition or results of operations.

Table 1    PERFORMANCE AND DIVIDEND PAYOUT RATIOS

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Table 2    LOANS

Table 3    LOAN LOSSES AND RECOVERIES

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Table 5    RESERVE FOR UNFUNDED LENDING COMMITMENTS

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

Information required by this Item 3 is set forth in Item 2 under the caption “Risk Governance and Administration” and is incorporated herein by reference.

Item 4.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.    As of March 31, 2005, the end of the period covered by this Quarterly Report on Form 10-Q, Wachovia Funding’s management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, Wachovia Funding’s Chief Executive Officer and Chief Financial Officer each concluded that as of March 31, 2005, the end of the period covered by this Quarterly Report on Form 10-Q, Wachovia maintained effective disclosure controls and procedures.

Changes in Internal Control Over Financial Reporting.    No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fiscal quarter ended March 31, 2005, that has materially affected, or is reasonably likely to materially affect, Wachovia Funding’s internal control over financial reporting.

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Part II.    OTHER INFORMATION

Item 1.    Legal Proceedings.

We, Wachovia and the Bank are not currently involved in nor, to our knowledge, currently threatened with any material litigation with respect to the assets included in our portfolio, other than routine litigation arising in the ordinary course of business. Based on information currently available, advice of counsel, available insurance coverage and established reserves, we believe that the eventual outcome of the actions against us and/or our subsidiaries will not, in the aggregate, have a material adverse effect on our consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to our results of operations for any particular period.

Item 2.    Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

Information required by this Item 2 pursuant to Item 703 of Regulation S-K regarding issuer repurchases of equity securities is not applicable since we do not have a program providing for the repurchase of our securities.

Item 3.    Defaults Upon Senior Securities.

Not applicable.

Item 4.    Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 5.    Other Information.

None.

Item 6.    Exhibits and Reports on Form 8-K.

(a)    Exhibits.

(b)    Reports on Form 8-K.

During the quarter ended March 31, 2005, Wachovia Funding did not file any Current Reports on Form 8-K with the Commission.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 12, 2005

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EXHIBIT INDEX

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